James Taylor, wealth adviser at Compound Planning, said he felt “replaceable” after ChatGPT did a “good job” of building a low cost portfolio.
Based in America, Taylor explained he told the AI he had $3mn to invest with half of the money in retirement accounts and the other half in non-retirement accounts.
He was 65 years old with a wife and two children and wanted a low cost portfolio as well as feedback on financial planning ideas he should be thinking about.
He found ChatGPT did “a really good job” of building a low cost portfolio that was mostly tax efficient.
“The financial planning ideas were very good. It spat out a financial plan in less than 30 seconds and it was very similar to what I would recommend. It took me over a decade to have the knowledge and expertise to do this.
“It made me feel marginalised. Not important. Replaceable,” Taylor wrote in a post on LinkedIn.
He then asked ChatGPT to tell him what to do if the market were to drop 30 per cent.
It [ChatGPT] made me feel marginalised. Not important. Replaceable
“It was spot on and provided an answer that I’ve provided to my clients many times over through multiple market corrections.
“It even mentioned to consider Roth conversions. It was a lengthy response, but basically, the answer was stay the course.
“Another question I prompted. What is a sustainable withdrawal rate?
“Again, it provided some sound advice and reasoning,” Taylor explained.
ChatGPT’s view on advice
The adviser finally asked the AI if it made sense paying someone 1 per cent to action all of the above advice it had given him if he did not have the time to do it himself.
ChatGPT replied: “Yes, it can be if the adviser truly provides full-service wealth management and acts as a fiduciary.
“Compare it to the value you’d get if you had to do all the investment research, tax co-ordination, retirement planning, and withdrawals yourself. For most people, paying 1 per cent to save stress and avoid mistakes is worth it.
“Some advisers offer tiered pricing or flat fees, but for $3mn, AuM often makes sense.
My main takeaway is that it [Chat GPT] provided a lot of detail and complexity and for someone to try and DIY their own plan opens the door to the potential for major mistakes.
“The key is fiduciary duty, you want someone who is legally obligated to act in your best interest.”
ChatGPT provided Taylor with a list of things he needed to confirm if he were to reach out to an adviser.
The list included scope of service, tax co-ordination, behavioural support, transparency of fees and whether they will offer custom planning.
“For someone in your situation $3mn investable, starting retirement, multiple accounts, and a desire to avoid the minutiae, paying 1 per cent for full-service fiduciary guidance is very reasonable.
“You’re buying peace of mind, time, and stress reduction.
“The alternative is years of research, spreadsheet management, and ongoing decisions, which most retirees don’t want,” the AI said.
AI ‘should not replace human advice’
Taylor said the AI did “ok” but he could spot when the recommendations it made were right or wrong.
“My main takeaway is that it [Chat GPT] provided a lot of detail and complexity and for someone to try and DIY their own plan opens the door to the potential for major mistakes.
“That’s not even factoring they have to hold themselves accountable and actually follow through. I’ll be curious to see when AI is held accountable for it’s ‘advice’.
“As advisers, we obtain licenses, advanced designations like the CFP and CFA, and be registered. In most cases, we have years of experience working with real life situations and care deeply about the people we work with and the relationship.
“Just the other day, one of my clients was having the equivalent of a financial anxiety attack. I spent an hour on the phone talking through her plan and reassuring her things would be ok. How is AI going to replicate that?” he asked.
Taylor saw AI as a great starting point for people to sketch out ideas and assist with learning and to bring those ideas with them to a meeting with an adviser however he did not believe it should be a substitute for the real thing.
alina.khan@ft.com
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